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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The most desirable alternative given up as the result of a decision






2. Models where firms agree to mutually improve their situation






3. A good for which higher income decreases demand






4. Ed < 1






5. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






6. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






7. Two goods are consumer substitutes if they provide essentially the same utility to consumers






8. The difference between total revenue and total explicit costs






9. Exists at the point where the quantity supplied equals the quantity demanded






10. The mechanism for combining production resources - with existing technology - into finished goods and services






11. AFC = TFC/Q






12. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






13. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






14. The rational decision maker chooses an action if MB = MC






15. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






16. The marginal utility from consumption of more and more of that item falls over time






17. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






18. Models where firms are competitive rivals seeking to gain at the expense of their rivals






19. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






20. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






21. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






22. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






23. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






24. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






25. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit






26. Ed = 0 - no response to price change






27. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






28. Ed = 1






29. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






30. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






31. Demand for a resource like labor is derived from the demand for the goods produced by the resource






32. Ed > 1 - meaning consumers are price sensitive






33. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






34. The sum of consumer surplus and producer surplus






35. Entry of new firms shifts the cost curves for all firms upward






36. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






37. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






38. The imbalance between limited productive resources and unlimited human wants






39. A good for which higher income increases demand






40. The output where ATC is minimized and economic profit is zero






41. A firm that has market power in the factor market (a wage-setter)






42. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






43. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






44. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






45. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






46. The change in quantity demanded resulting from a change in the price of one good relative to other goods






47. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






48. The price of a good measured in units of currency






49. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






50. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good